BI Cuts Banking Credit Growth Target to 9 Percent

Jakarta – Bank Indonesia (BI) has cut its target for banking credit growth in 2023 to 9 percent – 11 percent on an annual basis or yoy.

“Bank Indonesia forecasts credit growth in 2023 in the range of 9 percent – 11 percent yoy,” said Governor of Central Bank (BI) Perry Warjiyo in the RDG Press Conference, Tuesday, July 25, 2023.

Previously, BI was optimistic that credit growth in 2023 would be in the range of 10 percent – 12 percent yoy. This optimism is reflected in bank credit growth in December 2022 which grew by 11.35 percent yoy, higher than the previous year’s growth of 5.24 percent yoy.

The revision of credit growth is due to slower credit growth. Recorded until June 2023, credit only amounted to 7.76 percent yoy, mainly supported by the Business Services, Social Services, and Mining sectors.

This figure is lower than the previous month which amounted to 9.39 percent yoy. “The slowdown in bank credit is due to the declining demand for credit from the business world,” Perry said.

He added, in the midst of the loosening of the supply side by the availability of liquidity, high lending plans, and loose lending standards, corporations tend to accelerate credit repayments, and wait-and-see behavior in increasing their investment plans going forward. (*)